SIMON WATKINS: Mighty Amazon sinks to new low in publishing row

Last week
we reported on the latest efforts by Mars to put the squeeze on
suppliers by delaying payment times or demanding price cuts. This week
we see a similar row emerging in the world of book publishing.

Amazon’s
near stranglehold on book sales means it can afford to fight hard and
ruthlessly against publishers, with even the biggest such as Hachette
finding themselves on the back foot.

There are distinct features to the Amazon situation, but at root it is about a dominant business throwing its weight around.

Under pressure: Amazon's near stranglehold on book sales means it can afford to fight hard and ruthlessly against publishers

Publishers will have to rethink their model in the digital age and there will have to be a negotiated solution.

But
the fact that Amazon chooses to negotiate by simply stopping selling a
particular book suggests it is not approaching this issue
constructively.

Amazon
may dispute this characterisation, but it urgently needs to address its
manner of business or it risks replacing investment banking as the
epitome of tax-dodging and ruthless corporate brutality.

Help to Buy is a controversial policy, with critics claiming it has helped to fuel a housing bubble in some parts of Britain.

Figures
last week showed that the bulk of Help to Buy loans, in which the
Government underwrites part of a mortgage, were granted to homebuyers
outside London and at the cheaper end of the market.

So
it would seem the doomsayers were wrong and Help to Buy has not fuelled
the slightly barmy price rises in the capital. In fact with just over
7,000 homes bought with the assistance of the scheme it has in fact been
quite a small factor anywhere, accounting for less than 2 per cent of
all purchases.

But
it still leaves the question of what is going on with house prices in
some areas and what, if anything, the Bank of England can do to stop
hotspots becoming a danger.

It
has long been presumed that the Bank will call for a cap on the size of
mortgages that qualify for Help to Buy. That is all well and good, but
if it has not been in any way the cause of the London housing bubble,
then curtailing it can’t be the solution, at least not on its own.

The
fact that Help to Buy has been found not guilty of stoking a bubble in
some areas in fact poses the Bank of England with a more difficult task
of finding out what really is going on and finding a mechanism to deal
with it.

The
key meeting of the Bank’s Financial Policy Committee – the branch in
charge of tackling bubbles and other such risks to stability – will be
in just over two weeks’ time. It is the first big test of this new body
and the City will be watching closely.